Electric Vehicles Are Here: What Does It Mean for Dealerships?

As automakers continue to pour billions of dollars into developing and expanding their electric-vehicle portfolios, a growing number of new electric vehicle (EV) models are being unveiled, including the Chevrolet Bolt and Tesla Model 3. But these are only the beginning.

The Biden administration plans to make these vehicles make up half of all new-car sales by 2030. Currently, EVs account for around a percent of the global car stock. However, this small percentage represents at least 10 million electric vehicles around the world.

In 2020 alone, sales reached three million, a whopping 40 percent increase compared to 2019. Meanwhile, the IEA analysis showed that at least 300 million EVs will ply the road in 2030.

Many Americans are investing in EVs for many reasons. What are the benefits of EVs?

  • They are emission-free.
  • EVs do not require gasoline or diesel to work. Instead, they run on electricity, which is a cleaner alternative.
  • EVs have a cost of ownership that is significantly cheaper when compared to their gas counterparts.
  • With the recent developments in the global car industry, automakers have been working hard to ensure that EVs have high performance. They come with improved engines and better batteries, allowing them to travel longer distances before recharging.

But what does this massive growth of EVs mean for dealerships in the country?

1. Pricing Vehicles Might Be More Challenging

Although EVs are becoming more in demand, they are less likely to overtake the sales of traditional models anytime soon. It could, however, place dealerships in a tight spot.

First, the demand is there, but they cannot sell EVs at such a high price. Otherwise, customers won’t buy. Second, dealers are facing some competition with comparison websites. These sites make it easier for any customer to shop for lower-priced EVs within the area.

How can the dealers retain their profit without losing a vital market? One of the solutions is to look for auto franchise opportunities that already include in-house financing. With this, businesses can:

  • Focus more on customer satisfaction rather than solely focusing on the sale.
  • Generate another revenue, which is through loans.
  • Attract new customers who might not be able to afford EVs.
  • Develop better relationships with partners like manufacturers, dealers, and banks/lending institutions by partnering them with online technology solutions to streamline operations and gain deeper insights into vehicle sales performance or any other metrics for EV purchase transactions or services on their shelves at the same time.

2. Routine Services Might Be Less Frequent

Compared to traditional vehicles, EVs have fewer moving parts. This means that they require less regular maintenance. However, when they need it, customers would likely end up spending more.

Many dealerships make a lot of money on maintenance. An oil change, for example, could generate a revenue of at least $40, including overhead and labor. This service won’t be necessary with EVs.

With EVs requiring less routine maintenance, dealers can focus more on specialty services for their EV customers. This area offers the best opportunity for revenue growth, considering that currently, this market is small but growing.

Dealers can offer home charging equipment for EVs. No longer do buyers need to wait in long lines at gas stations. They can install chargers at their homes, opening up other opportunities for dealerships to provide services other than just selling the vehicles.

They can also focus on post-sale services such as battery replacements and software updates. This area is critical as technology continues to change and newer models come out every year.

Dealerships could also consider the services offered by EV manufacturers. Some companies provide pickup and delivery services, while others will even recharge vehicles at their facilities for a fee. This is an excellent way to earn revenue without having to sell something that may not be necessary.

3. Long-term Service and Support Might Be the Key
green ev charging

As more EVs hit the road, dealerships will need to invest in long-term service and support. This includes warranty services for new EVs on top of routine maintenance.

Dealerships should be prepared for this market’s expansion by optimizing their IT infrastructure to handle such requirements adequately.

It also means that dealerships need to keep up with EV technology. Manufacturers are continually improving their vehicles, which could mean that they also improve the battery charging rates. Thus, dealerships should be ready to invest in newer charging stations and other equipment.

Dealerships also need to think of ways to offer the best service to keep their current customers happy and loyal while attracting more new ones. Besides providing more extended warranty periods for EVs, they can focus more on safety features such as emergency stop assistance and backup cameras. This way, car buyers know that their EVs will be safer on the road.

Dealerships could also focus more on customer experience and content marketing to keep them ahead of tech-savvy consumers who want equal, if not greater value, than traditional vehicle owners.

Electric vehicles are becoming more prominent in the industry, and dealerships need to prepare for this trend now. Changing consumer preferences could be challenging for some businesses that haven’t invested in supporting EVs.

However, by doing so, they can grow their revenue further through loans or other services like installing home-charging equipment and vehicle software updates. If they can offer better service, they can also keep their customers loyal.

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